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CaptainSwing

The Crash Is Beautiful

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Hi everyone, I'm a long time lurker, been following the site since I arrived in London as a student and then in the early years of my career.

It's quite plain that we are right now in the middle of a profound and severe house price crash. It started in Q3 2014, and its epicentre is high value SOTR 'period' and new build property, mostly around nine elms and the surrounding areas.

Let's be very clear about where we are.

1. The crash may only manifest itself generally after the election. The election will be blamed for the 'instability' but in truth we know for a fact that high end LONDON property began tanking six months previously.

2. Mortgage credit drought is only at most only part of the problem. The issue is not simply that people cannot obtain secured finance without lying about their income or the purpose of their loan (eg a BTL loan which is lived in by the borrower). The issue is that there is too much supply at the high end. Only 4000 properties have ever sold in London for more than £1million. Yet 50000 new build flats (including sold off plan) are intended for that price point. There is not a shortage of houses to buy. In contrast, there is a supply glut. And for the MSM's point that it is a 'simple case of supply and demand', planning rules and lack of speculative returns prevent the construction of 'affordable' homes. As ever, if you can't afford to buy a house, you can't afford to buy a house.

3. An alternative source of blame could be the Euro. Insofar as capital flight to 'safe' high end property is a source of continued demand, it might be thought that a Euro collapse / black swan event like Greece leaving would be beneficial. This is not the case. The big money is already here: UK prices should be deflating nicely alongside Eurozone ones.

In short, my view on nominal prices over the next parliament:

- 15% drop (happening already since Q3 2014)

- 75% drop over three to five years

When London blows, it will blow big.

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Hope you are correct.

I had a browse this morning for "cash buyer only" property.

It uncovered the fact there were new build 1 bedroom flats in Croydon currently for sale for £375k. The advert stated "We have Chinese speaking staff".

I can see properties like that falling to sub-£100k easily.

Edited by Timak

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The crash started in 2007, you are 7 years too late with your prediction.

What you must be talking about is the collapse of the small fraud that is the london mega bubble, built off the back of the "stops" that were put in place to try and stop the 2007 crash deflating prices further.

Fortunately, this lunacy has cause this localised london mega bubble which will now collapse house prices from their 2009-2013 plateaud/government supported low interest rate/low volume level.

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The crash started in 2007, you are 7 years too late with your prediction.

What you must be talking about is the collapse of the small fraud that is the london mega bubble, built off the back of the "stops" that were put in place to try and stop the 2007 crash deflating prices further.

Fortunately, this lunacy has cause this localised london mega bubble which will now collapse house prices from their 2009-2013 plateaud/government supported low interest rate/low volume level.

Agreed. What you must remember is that younger workers in London will have only had experience of this smaller localised bubble.

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When you hear of estate agents cashing in gains you know the tipping point has certainly tipped.....all down hill from now.

When you hear of estate agents hanging form lamp-posts, it's probably time to buy.

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Only 4000 properties have ever sold in London for more than £1million.

I'm pretty sure that this figure is unlikely to be accurate. Do you have any kind of source for your claim?

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The crash is invisible is a more plausible tag-line.

Although I'm not disagreeing with the OP, it would require a detailed search of MSM or specialist websites (HPC or EA Today) to realise it's happening. With reruns of LLL and happy clappy reactions to the Rightmove Fraud Index by the BBC, Joe Debt-Slave thinks it's all as safe as houses (of cards).

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Good post; ... profound and severe; it has to be that way.

Prices are utterly insane. Newbuild prime/new gentrified area quasi prime supply coming online maybe be a glut, other areas it seems not so much. Too few nicer homes on market, except for a few asking crazy prices. Not sure how sellers can resist rushing to market to cash in; pitiful supply. When something gives, more sellers will look to sell - when sentiment changes - and be a lot more amenable to accepting lower prices to bring down wider market, and it will be beautiful; even against the breakdowns and excuses about no homeowner having ever known what they were doing, and then of the shock of hpi-locked in owners themselves. I'm expecting a crash from the top end down.

Mortgage drought? Ever fewer willing buyers able to put down big deposit, why teaser rates falling further still, to pull at these price levels. A market can not crash until it's just about pulled in everyone who can and will buy at ever higher prices.

The way to win the game is to have cash on hand when others cannot get a loan. You do not want to be bidding your hard-earned savings against people who are bankrupting themselves with debt. It will be time to buy when lenders once again demand a 20% downpayment from everyone and get serious about checking ability to repay. We're not there yet, not even close. Find a nice cheap rental, invest your savings every month, and enjoy the show till then.

There's something I'm missing about the market; some facet of how it's going that is escaping me. Got a nagging suspicion it is something very simple, however complex its articulation in the market. Possibly just six words; buyer/homeowner coarse complacency about values.

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Why would this government or Labour let house prices fall though? I would love it if there were a crash but I don't think it is going to happen. They can pull infinite unknowns out of the bag, they have no reason to let house prices fall, it would damage the economy (which is completely dependent on HPI). I just don't think wishing something is going to happen will make it so. There are so many vested interests who have staked everything on HPI, most of the government and most politicians have their fingers in the HPI pie, why would these turkeys vote for Christmas, I just don't get the logic pf why the ptb would sudden allow a full scale collapse - what purpose would it serve them and so far we have all been proved wrong and every year house prices go up - sorry to be so pessimistic and I hope I am wrong.

Edited by fru-gal

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I don't get your position at time Count.

The crash started in 2007, you are 7 years too late with your prediction.

What you must be talking about is the collapse of the small fraud that is the london mega bubble, built off the back of the "stops" that were put in place to try and stop the 2007 crash deflating prices further.

Fortunately, this lunacy has cause this localised london mega bubble which will now collapse house prices from their 2009-2013 plateaud/government supported low interest rate/low volume level.

Most of the country dont live in London.

Other week, similar...

Prices have been crashing ( real terms ) for 6 years so Im not surprised.

Then at other times you admit to how it really is... which is similar for my area, way outside London. Asking prices and sold prices, way way way above 2007, except at the £1m+ end; occasion sale meeting a strong price, but suggestions of die-in-shock reality to come for some owners who thought the HPI was all locked in; too few buyers, although there again, supply constrained by too many who still believe HPI locked in.

With that logic, Carney must know what he's doing and Osborne really has saved us.

meanwhile, in Northampton, estate agents are listing 3 bed house in mediocre areas for 75K more than they COULDNT sell them for 18 months ago.

have a read at the northampton thread in the regional forum. Your not going mad, the asking prices have gone exponential and Making the 2007 insane prices look reasonable, which we know they weren't.

Best stay out of it till normality resumes and people realise whats been going on. If that doesn't happen this year, leave.

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I don't get your position at time Count.

Other week, similar...

Then at other times you admit to how it really is... which is similar for my area, way outside London. Asking prices and sold prices, way way way above 2007, except at the £1m+ end; occasion sale meeting a strong price, but suggestions of die-in-shock reality to come for some owners who thought the HPI was all locked in; too few buyers, although there again, supply constrained by too many who still believe HPI locked in.

I think i'm pretty clear on my position, the crash started in 2007. The crash has happened in real terms. The majority of people in the UK are not in a position to benefit from this. House prices in the UK must have been looking cheap to the Swiss, Russians and chinese for a while there. We've been forced to live in a country hell bend on globalisation to benefit the 1%-ers, I dont thnk they care that the people buying their over-priced houses are not british. When the foreign idiots dry/dried up and prices no longer look cheap then there is no one in the UK to support those mad london prices.

Wages are not going up, so as a result the nominal price crash will recommence at some point. The london mega bubble is a side show, I think it caught the tories by surprise, and it collapsing is the thing that will kick off the nominal collapse.

IN the examples above Im pretty sure those are asking prices Im talking about, not selling prices.

Sold prices in Northants are still 8% below 2007, asking prices are 20-30% above.

Ask TMT about the swansea market and the estate agent shenanigans, it's a false market and only them that profitted from the london mega bubble or the incredibly stupid would buy into the housing market right now.

Many people here said this crash would take 5-10 years to play out, they were right,

I cant see past the fact that due tot he insanity of the british government there will have to be another nominal crash, 60% in london, 20-40% outside. Had they just let if fall sharply then regulate the bankers then this madness would be over for us all.

Edited by TheCountOfNowhere

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Why would this government or Labour let house prices fall though? I would love it if there were a crash but I don't think it is going to happen. They can pull infinite unknowns out of the bag, they have no reason to let house prices fall, it would damage the economy (which is completely dependent on HPI). I just don't think wishing something is going to happen will make it so. There are so many vested interests who have staked everything on HPI, most of the government and most politicians have their fingers in the HPI pie, why would these turkeys vote for Christmas, I just don't get the logic pf why the ptb would sudden allow a full scale collapse - what purpose would it serve them and so far we have all been proved wrong and every year house prices go up - sorry to be so pessimistic and I hope I am wrong.

But what else in the cold light of day can they do if or more like when it all starts coming down? There's nothing left they can do that will have a drastic enough affect on preventing falls now, imo. Whatever people say about negative interest rates I'll be ******ed if the banks start letting people borrow money for free let alone paying them to take out a mortgage. HTB has had its effect as regards pushing up prices, I can't see them offering 30% deposits etc.

Most of the support to date has been to bail out the banks, nothing more.

Sure, they'll pull some rabbits out of the hat but I can't see anything they do have any effect other than to add a little bit of traction as prices come tumbling down.

That's assuming of course they even want prices to stay high, when there's every chance that they would prefer them to fall.

Edit: To the bit in bold, that's clearly nonsense as there's a very good reason they would 'let' prices fall. I've got to agree with Venger, they surely want higher volumes of lending to a whole new generation of debt slaves which will require prices to come down.

Edited by Billy Ray Valentine

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But what else in the cold light of day can they do if or more like when it all starts coming down? There's nothing left they can do that will have a drastic enough affect on preventing falls now, imo.

MIRAS, FTB grants, direct loans from government - these would be my guess at the next things they will try.

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Why would this government or Labour let house prices fall though? I would love it if there were a crash but I don't think it is going to happen. They can pull infinite unknowns out of the bag, they have no reason to let house prices fall, it would damage the economy (which is completely dependent on HPI). I just don't think wishing something is going to happen will make it so. There are so many vested interests who have staked everything on HPI, most of the government and most politicians have their fingers in the HPI pie, why would these turkeys vote for Christmas, I just don't get the logic pf why the ptb would sudden allow a full scale collapse - what purpose would it serve them and so far we have all been proved wrong and every year house prices go up - sorry to be so pessimistic and I hope I am wrong.

The UK government is just another player in all of this. UK government tax revenues are £500bn a year and they have huge and growing welfare and debt liabilities that need servicing. They are trying to hold a £5tn property market at a price that is 2-3x fair value. The government is not big enough to be able to do that forever.

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Why would this government or Labour let house prices fall though? I would love it if there were a crash but I don't think it is going to happen. They can pull infinite unknowns out of the bag, they have no reason to let house prices fall, it would damage the economy (which is completely dependent on HPI). I just don't think wishing something is going to happen will make it so. There are so many vested interests who have staked everything on HPI, most of the government and most politicians have their fingers in the HPI pie, why would these turkeys vote for Christmas, I just don't get the logic pf why the ptb would sudden allow a full scale collapse - what purpose would it serve them and so far we have all been proved wrong and every year house prices go up - sorry to be so pessimistic and I hope I am wrong.

Vote Labour dear.

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